February 5, 2013

China Is Not the Gaming Industry's Next Great Frontier

The People's Republic may lift its ban on consoles. It wouldn't be the boon that many expect.

Last month, China Daily, the country’s main English-language paper, reported that the People’s Republic might lift its 13-year-old ban on video game consoles. Like many communiqués out of Beijing, this one was more of a well-sourced rumor—an unnamed Ministry of Culture said they were considering “the possibility of opening up the game console market,” which ministry representatives later denied—than official pronouncement. But the lack of clarity did little to dissuade the invisible hand of the market: Within hours of the announcement, Sony and Microsoft—makers, respectively, of the PlayStation and Xbox video game consoles—saw their stock prices spike on the Tokyo exchange.

It’s not hard to understand the excitement. The video game industry, which just had one of its roughest years in a decade, is salivating at the prospect of a massive new market for hardware and software alike. But China, despite its 1.3 billion people, isn’t it. Even if the console ban1 were lifted, the industry stands to gain very little from doing business there.

The first, and most obvious, reason is technological. The current generation of consoles is equipped with sophisticated measures designed to prevent gamers from playing counterfeit software on the machine. And you needn’t be much of a Sinophile to know that Chinese attitudes toward intellectual property are markedly different than our own: Shanzhai, or knock-offs, are considered less a violation of law than a measure of industriousness and entrepreneurship, and their widespread sale is largely ignored by authorities. Admitting the scope of the problem, Wei Qing, the head of Microsoft’s Windows unit in China and one of the key figures monitoring software abuses in the country, told Tom Doctoroff, “We want to create a new religion, a new standard of civility in China. It will take a long time.” And time is a luxury for the gaming divisions of Microsoft and Sony, which sell their hardware at a loss and expect to turn a profit on games.

This fundamental economic reality—often compared to the shaving-razor model—is also at odds with another aspect of Chinese video game culture: Unlike American gamers, who expect to pay a monthly subscription fee for computer games like World of Warcraft, Chinese gamers expect to play for free and pay for a host of microtransactions, such as purchasing virtual pets or superior weaponry. Because computer games themselves aren’t banned in China,2 a host of American game studios are partnering with Chinese developers to release free-to-play versions of their most prominent titles. In 2010, for example, Sony released a free edition of its popular Everquest 2, in the hopes that, in the long run, Chinese consumers will spend as much money on in-game trinkets as their American counterparts do on subscriptions. “Sometimes,” said John Smedley, president of Sony Online Entertainment, “you make a decision and you're like 'Oh God, let’s buckle in and hope everything goes well.’ That’s how it was with free-to-play.” For console makers, who need huge cash flows to subsidize their costly hardware, this is a much tougher bet to make; they need to sell many more games (each of which costs somewhere around the $60 mark) and subscriptions (a season’s pass for a year’s worth of additional playable content goes for $30) in order to make a profit.

It is not, however, China’s economic predilections or technological peculiarities but the nation’s culture that presents the biggest challenge to the video game industry. As with every bit of cultural content imported by China, the government filters out anything it considers offensive to its national sensibilities. In 2004, the Ministry of Culture established a committee to screen and approve imported games. Xinhua, the state’s official news agency, announced that the new body will block out “games with content violating basic principles of the Constitution, threatening national unity, sovereignty and territorial integrity and that might divulge state secrets should be banned from importing. Online games with content threatening state security, damaging the nation's glory, disturbing social order and infringing on other's legitimate rights will also be prohibited.”

The committee’s first targets were obvious. Command & Conquer: Generals, for example, was blacklisted for merely featuring the Chinese army as a playable character in a near-future dystopia that allowed users to blow up landmarks like the Three Gorges Dam. A year later, in 2005, the seemingly innocuous Football Manager was banned as well, because it featured Tibet as an independent country.

Such sensitivities should be easy enough for console makers to oblige: Football Manager wasted no time in releasing an amended, and geopolitically correct, version. Furthermore, China’s interest in seeing its own culture represented onscreen might provide new sources of narrative inspiration for an industry that has all but exhausted its alien-invasion and nuclear-holocaust storylines. But as far as Beijing is concerned, the “social order” is disturbed by representations of sex and violence. This is why one of the most successful attempts to navigate the console ban in China is that of iQue, a partnership between a local Chinese manufacturer and Japan’s Nintendo. The company’s website makes no qualms about its philosophy: “The reason Nintendo is iQue's best partner,” it reads, “is because the former has always been strongly opposed to violence and pornography in the gaming industry, and its mission is to develop quality healthy games suitable for all ages. At a global gaming market flooded by vulgar products, Nintendo still maintains a precious social responsibility and business ethics, and therefore is consistent with iQue's corporate philosophy and the Chinese moral values.”

There’s the rub: It will be nearly impossible for console makers to uphold China’s moral values. Unlike computer games, which, played with a keyboard, revolve around intricate strategies that require many buttons to complete, consoles, with their much simpler controllers, are usually devoted to games that require a lot of repeated running, jumping, and gun-firing. With two or three notable exceptions—Just Dance 3, say, or NBA 2K12—the past year’s best-selling titles were operatic celebrations of violence. Even as they grow increasingly complex, series like Battlefield or Call of Duty are still largely exercises in button-mashing, each frantic press launching a bullet, a rocket, or a punch.

Or a lascivious kiss: Video games may not show as much skin as Hollywood movies, but they are products of American popular culture, and as such are rarely without some glimpse of flesh.3 Last year alone, gamers had the chance to visit a brothel in Max Payne 3, climax inside a she-demon in Far Cry 3, and witness a spell of post-coital bliss in The Darkness II.

Such content is unlikely to get past the Ministry of Culture’s censors. And consoles, sadly, are incapable of offering anything else. Because console games are, by nature, interactive experiences; because they move rapidly and require instinctive reactions; because they are controlled by a device with eight buttons, no more than a few of which may be simultaneously manipulated; because they engage many more muscles than most observers realize; and because all of the above make it impossible to actually think during gameplay, most console games are arenas for pixilated ids to run amok. They are inherently geared toward violence; not for nothing have so many soldiers compared combat—a similarly frantic, instinctual, and mindless experience—to playing a video game. Generally speaking, we revel in this sort of individualistic mayhem in America; in Communist China, it’s shocking.

The Chinese ban on video games will likely be lifted someday, either soon or in the distant future. When that happens, Sony and Microsoft will probably do what they do best: hawk their machines at steep discounts. At first, they may succeed in generating buzz and moving units. But as one blockbuster game after another is banned by the regime, and as the machines reject all but the full-price, non-counterfeit discs, Chinese gamers will likely be where they’ve been all along: sitting at their computers, splurging on cheap virtual Shih Tzus or magical swords, and reveling in a gaming culture that is all their own.

Originally passed to protect consumers from shoddily run video game arcades, the ban technically expired in 2009. It was also, strictly speaking, not a ban: As Engadget noted, the ordinance left room for interpretation, resulting in a trickle of consoles.

2

The Chinese PC gaming sector, in fact, is the largest in the world, with annual profits of $6 billion, a third of the world’s total.

3

In China, on the other hand, digital romance was explored in a popular game called Emotional Quotient Gas Station, an educational, government-approved title designed to teach young men how to respectfully interact with young women.